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Eric Clark was trying to finalize terms to do a major software implementation for a client. Based on his analysis, he will be spending 140,000 each month for 24 months. The client informed him that they will generate a Request for Proposal (RFP) and distribute it to the Clark and his competitors. If the RFP were issued, Clark would bid his normal rate of $175,000 per month. At that bid, the consensus estimate from the team was a 55% chance of winning. The terms of the RFP set by the client were to pay 90% of the revenue amount bid directly each month to the winning bidder plus a gain share at the end of the 24th month to make up for the bid revenue not paid out. The client would base the gain share on the documented savings obtained from the new implementation:

Savings	Clarks gain share
< $4.0 million	0
$4 million up to $6 million	20 percent of the excess above $4 million
$6 million up to $8 million	$400,000 plus 40 percent of the excess above $6 million
> $8 million	$1.2 million plus 60 percent of the excess above $8 million

Clarks team had used prior experience and judgment and estimate that the savings would have a triangular distribution with a low of $3.2 million, a high of $12.8 million, and a most likely value of $5.6 million. Please also use a discount factor of 0.5% per month.

Inputs
Interest rate per month (0.5%)	0.005
Cost per month	140,000
Proposed Bid
Fee per month	175,000
RFP case - Gain share
Probability of winning bid (55%)	0.55
Fee per month (175,000*0.9)	157500
Gain Share table:
	Savings (in millions)	Share
	< 4	0
	4 - 6	20% of excess above 4 million
	6 - 8	400,000 + 40% of excess above 6 million
	> 8	1.2 million + 60% of excess above 8 million

Find Expected (mean) Value and Std dev of Clark's total Profits

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